The automobile industry is pouring more than $1tn into a revolutionary shift from combustion engines to electric vehicles guided by software.
From Detroit to Shanghai, automakers and government policymakers have embraced the promise of electric vehicles to provide cleaner, safer transportation.
European countries and California have set 2035 as the deadline for ending sales of new combustion passenger vehicles.
Tesla’s surge to become the world’s most valuable automaker — achieving a $1tn valuation last year — humbled established automakers such as Toyota Motor Corp and Volkswagen that once were reluctant to go electric.
Starting next year, a wave of new electric vehicles from pickup trucks to middle market SUVs and sedans will hit the world’s major markets.
In China, the world’s largest single automotive market, battery electric vehicles have captured about 21% of the market.
In Europe, EVs account for about 12% of total passenger vehicle sales. But in the United States, EV market share is only about 6%.
Among the barriers to EV adoption are a dearth of public fast-charging infrastructure, and the rising cost of EV batteries, driven by shortages of key materials and uncertainty over government subsidies that have buoyed EV purchases in major markets including the United States, China and Europe.
By 2029, electric vehicles could account for a third of the North American market, and about 26% of vehicles produced worldwide, according to AutoForecast Solutions, a consultancy.
Electric vehicle sales likely will not increase in a smooth, ever-ascending curve, according to AFS President Joe McCabe. If there is a recession next year, as many economists forecast, that will slow EV adoption.
Wards Intelligence forecasts that combustion vehicles will make up just under 80% of North American sales in 2027. Based on automakers’ product plans, Wards analyst Haig Stoddard has said manufacturers “expect strong ICE (internal combustion engine) volume heading into the next decade.”
Throughout 2022, established automakers such as Mercedes, Ford and General Motors unveiled dozens of new electric vehicles to challenge Tesla and the upstarts.
Mass production of most of these vehicles kicks into gear starting in 2023 and 2024.
By 2025, there could be 74 different electric vehicle models offered in North America, McCabe said. But he predicts fewer than 20% of those models are likely to sell at volumes above 50,000 vehicles a year.
Here’s the flip side of the EV narrative: Industry executives and forecasters do not agree on how rapidly electric vehicles could take over half the global vehicle market, let alone all of it.
The transition to the electric vehicle age appears to be all but certain with the success of Tesla, but veteran automaker Toyota is still not fully convinced that EVs are the only way forward.
Recently, Toyota president Akio Toyoda stated that he is part of the automotive industry’s “silent majority” who have doubts about the exclusive pursuit of electric vehicles.
He noted that people in the auto industry are actually a “silent majority,” and they are wondering if all-electric cars are really the only way forward.
While automakers like General Motors and Honda have set targets for when their vehicle lineups will consist exclusively of electric cars, Toyota has instead chosen to pursue a diverse range of vehicles that include hydrogen-powered cars and hybrids.
While slowing economies threaten overall vehicle demand globally, in a wider sense, the next few years will determine whether the 21st Century’s crop of electric vehicle brands will follow a similar path.
Related Story